Dear Colleagues & Staff,
Please provide your feedback on this resolution I am proposing for adoption.
JGA
Whereas, Strategic HFC is committed to incentivizing the creation of projects that not only meet but exceed current construction quality standards, focusing on durability, energy efficiency, and eco-friendliness, and
Whereas, Strategic HFC is committed to implementing the best practices in multifamily residential construction and wishes to encourage developers to adopt high standards in construction, including the use of superior materials and proven quality control measures, and
Whereas, multifamily residential construction quality deficiencies not only adversely affect the tenants we aim to serve but also have a profound impact on the net operating income for these projects,
Now Therefore, Be it resolved that the Strategic HFC Board of Directors requests that the Executive Director develop and present for Board adoption a construction quality checklist for prospective partnerships building new multifamily residential properties. The checklist may include, but is not limited to, the components in Appendix A.
Further resolved, the Strategic HFC Board of Directors requests that the Executive Director develop and present for Board adoption a construction monitoring report for new construction projects in the Strategic HFC portfolio. The report should summarize and analyze the information included in the documents referenced in Appendix B; the report may also summarize and analyze any other information sources deemed appropriate by the Executive Director.
Further resolved, the Strategic HFC Executive Director will make reasonable efforts to incorporate a mix of requirements and optional incentives that achieve the construction quality components included in Appendix A whenever new construction deal terms are updated.
Be it further resolved that the Board of Directors requests that the Strategic HFC Executive Director present the construction quality checklist and construction quality monitoring report no later than the Strategic HFC’s Board of Directors’ June regular monthly meeting.
Appendix A – Construction Quality Components
Quality Control Program: Contractors must submit a comprehensive Quality Control Program in writing to Strategic HFC staff covering all construction aspects. This program requires approval from all project engineers and architects. It should detail procedures for maintaining quality standards across different construction stages, from foundation work to finishes.
Quality Control Monitor: A dedicated independent Quality Control Monitor with verified credentials must be appointed for each project under Strategic HFC’s control. This monitor is responsible for overseeing the Quality Control Program's implementation, ensuring adherence to the set standards throughout the construction process.
Waterproofing: Strategic HFC partners will engage a reputable third-party waterproofing consultant to specify high-quality materials and oversee their application from design and throughout the construction.
Advanced Roofing: Strategic HFC partners will document use of a superior roofing system. This includes selecting materials that offer greater durability and cost efficiency over the building's lifecycle, such as metal roofing or single-ply systems like TPO or EPDM. Strategic HFC partners will provide detailed plans and specifications for the proposed roofing system to illustrate your approach to achieving a high-quality, sustainable roofing solution.
Windows: Strategic HFC partners will install energy-efficient, double or triple-glazed windows with improved sealing technology to enhance thermal performance and reduce energy consumption.
Landscaping: Strategic HFC will implement drought-resistant landscaping or xeriscaping to minimize water usage and maintenance, contributing to the project's environmental sustainability.
General Contractor Bidding. Strategic HFC will require partner’s document previous experience with similar construction projects to the one proposed by a prospective partner. If staff determines that the experience is not satisfactory, the prospective partner will be required to have a competitive bid for its general contractor or an alternative risk management approach.
Appendix B – Construct Quality Monitoring Documents
Financial Statements (Profit and Loss, Balance Sheet, and Cash Flow)
Schedule of Values (SOV)
Construction Budget (including Budget-to-Actual Reconciliations)
Lien Releases (Partial and Full)
Construction Schedule (Baseline and Updated, with Schedule Variance Analysis)
Change Orders
Progress Reports
Quality Control Plan (QCP)
Quality Assurance/Quality Control (QA/QC) Program
Inspection and Testing Plan (ITP)
Non-Conformance Reports (NCRs) and Corrective Action Reports (CARs)
Inspection Reports
Material Submittals and Approvals Log:
Third-Party Testing Documentation
Bank Draw Requests/Loan Draw Documentation:
Detailed breakdowns of funds requested from the construction loan, including backup documentation, such as invoices and proof of work completed.
Project Cash Flow Forecast: A detailed forecast of cash inflows and outflows over the course of the project. This should include anticipated future expenses and income, helping to assess whether the project has sufficient liquidity to move forward without financial strain.
Cost-to-Complete Analysis: An assessment of how much it will cost to complete the project. This document is vital for determining if the current budget aligns with actual progress and remaining work, helping to identify any potential funding gaps.
Subcontractor and Vendor Contracts: Copies of agreements with subcontractors and suppliers. This ensures that proper contracts are in place and that subcontractors are also held accountable for their deliverables and timelines.
Surety Bond/Performance Bond Documentation: Full documentation of any performance or surety bonds that guarantee project completion.
Certificates of insurance (COIs) for the general contractor, subcontractors, and the project itself.
Contractor Qualification Statements: Updated qualifications for the general contractor, detailing their financial stability, past projects, current projects, and any outstanding claims or litigation.
Completion Guarantees
Updated Permits and Approvals: Ensure all current permits are valid, including building permits, site plan approvals, and any environmental clearances.
Environmental Reports: Phase I Environmental Site Assessment (ESA)
Developer Financial Statements: Full financial statements for the developer (not just the project), including balance sheets and income statements. Ensures that the developer has the financial capacity to continue operating and complete the project.
Retainage Documentation: A report on the retainage amounts held back from each contractor or subcontractor
Construction Change Directives (CCD)
Monthly financial statements from close to current date
General ledger on projects
Construction-Related
List of Design/Consultant team members and contact info (design/construction team)
Contact information for Syndicator’s Construction Inspector if applicable.
Copy of updated Schedule of Values
Copies of all current liens filed against the properties
Lien release documents on the operating and under construction properties that SHFC is partnered on
Copies of all Pay Apps and Change Orders
Copy of Buy-out Log or budget analysis
Name of any project management software being used for these Projects, and any fileshare links to relevant documents.
Name and contact information for primary construction team representatives (Project Manager, Field Superintendent, and administrative team for Pay Apps and Draws)
PCO (Potential Change Order) Log
RFI’s and plan changes
All testing and environmental reports
Site development and building permits, and list of all jurisdictions that will inspect various stages of construction.
Contact information and reports from third-party inspection services such as waterproofing, etc.
Contact information for Lender’s Construction Inspector
Confirmation of any regulatory requirements (TDHCA, Davis Bacon, MWOB, etc.) that are applicable to this project
GC Contract (and/or Prime Subcontract, if there are differences) and all Supplemental Conditions, Bid Qualifications, Exclusions, etc.
